Essay on Business Ethics, Social Responsibility and Banking Sector

This essay provides a comparative analysis of business ethics and social responsibility within the banking sector, using a case study involving the Goldman Sachs Group. It examines unethical practices such as misuse of customer information, attempts to suppress whistleblowers, and the pressure on employees to sell unsuitable financial products. The essay emphasizes the importance of banks upholding their social and corporate responsibilities, safeguarding customer information, and acting as ethical financial advisors. The analysis highlights the negative consequences of prioritizing profits over ethical conduct, including loss of trust and damage to the bank's reputation. The essay references a CNBC report and academic sources to support its arguments, offering insights into the need for greater transparency and ethical behavior in the banking industry.

Running head: ESSAY
COMPARATIVE BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
Name of Student
Name of University
Author note

1ESSAY
Business ethics are some of the primary codes of conduct that needs to be followed by
any business firm in order to practice sustainable and ethical business. In the recent times, the
banking sector is accused of practising different unethical practices such as frauds in stock
selling, accepting risk prone financial assets, compensation to millionaires and inhuman
evictions. These events have been reported in the past decade in different newspapers and
reflects the inefficiency of sharing the corporate responsibility that needs to be carried out by
them. It is required of the bankers to regain the value and trust of the customers.
In a recent report published in the CNBC on 11th September 2018, it says of a former
partner of the Goldman Sachs Group who claimed about some of the unethical practices of
the bank in 2015. In the report, the banker reported about the bank trying to use unethical
practices of obtaining and sharing customer information, which were supposed to remain
confidential (Reuters 2018).
Bankers are required to be more transparent about their operations where they require be
more objective with the roles that they play. Concerning the reports, it is the responsibility of
the banks to safeguard the information of the customers with utmost care. The information
are shared by the customer are done with trust and a vow of confidentiality (Fetiniuc and
Luchian 2014). However, in cases such as the reported one, it breaks the vow of trust that is
required to be practiced by the bank.
Moreover, the bank also tried to subdue the former employee by requesting him to
drop the matter and move on, keeping in mind the future of the bank. However, the banker
saw this as an improper way of covering up the crime and later left the bank to proceed on
with the accusation. The key unethical practice that has been highlighted in the report is the
improper use of information by the bank and trying to cover up the misdeeds. These aspects

2ESSAY
reflect the unethical attitude of the bank to gain profits. The unprofessionalism of the bank is
also highlighted in the report.
It is very important to understand the social responsibility that a firm requires to carry
out while performing business. In this case, the firm is the bank. As a bank, the primary
objective is to create wealth and provide financial support to families and businesses in the
form of credit (Paulet, Parnaudeau and Relano 2015). However, in this process, collecting
information is a very important aspect, which allows the bank to assess the credibility score
of the customer in order to process the loans. The information are shared solely for the
banking purposes and are required to be preserved with confidentiality. The social
responsibility of the bank is to safeguard the information, but on the contrary, it is being seen
that they are only responsible for the sharing of information.
Another important business ethics is the non-misuse of the position of power. As
banks attain a position of power related to the social and financial support, it is improper for
the banks to exploit the customers on the basis of their requirements. Customers often depend
on the banks for financial aids. Similarly, the bank also depends on the customers for their
revenues. So the policy obtained is a mutual sharing of interests, but it has been seen that
banks such as the Goldman Sachs Group try to implement their power by holding the upper
role in the dealings and exploit the customers, taking advantage of their financial
requirements.
Most banks in the recent times are seen to pressurize their employees to sell the
financial products. The amount of sale determines the incentives that are paid to the
employees. The inclination towards money, drives the employees to force or influence the
customers to buy the products which are not suitable for them. Financial products bought
without planning can be profitable for the banks but can put the financial burden on the

3ESSAY
customers. This can be seen as an improper and unethical practice. In the report, the
investment bank is seen to be trying similar practices, which reflects the use of unethical
practices by the banks in the recent times. The banks should be more considerate in selling
financial plans to the customers. The primary role of the bank, which is mainly to act as the
financial advisors, fails in the above-mentioned process (Jizi et al. 2014). The ethical
approach of the bank should be guiding the customers according to their financial
requirements and help them in choosing the right financial plans to safeguard their futures.
It has been also reported in the news article that the Goldman Sachs Group tried to
cover up its malpractices by trying to influence the whistle blower and silence things down
(Reuters 2018). However, according to the ethical practices that the banks are required to
follow, the banks should never co-operate with unethical practices. The banks attain a
respectable position among the public bodies who are responsible for the financial
development of the society and wealth accumulation. This position of power is attained by
the trust of the customers and the general public. Similarly, the banks also bear corporate
responsibility towards the customers to safeguard them from unethical practices such as
frauds or improper use of funds (Burianová and Paulík 2014). But if it is seen that the bank
itself is resorting to unethical practises and at the same time trying to cover up the crimes
using money or power, it results in the loss of reputation and social position.
The above discussion highlights a news article reported in the CNBC and analyses it
to identify the various unethical practices that are present in the banking sector and the
potential effects that they have on the society. In this regard, it can be seen that the banks
resort to these practices in order to increase their profits, but it has be kept in mind that the
banks bear a social and corporate responsibility towards the society where it plays the role of
a financial developer.

4ESSAY

5ESSAY
References:
Burianová, L. and Paulík, J., 2014. Corporate Social Responsibility in Commercial Banking-
A Case Study from the Czech Republic. Journal of competitiveness.
Fetiniuc, V. and Luchian, I., 2014. Banking ethics: main conceptions and problems. Annals
of the University of Petroşani. Economics, 14(1), pp.91-102.
Jizi, M.I., Salama, A., Dixon, R. and Stratling, R., 2014. Corporate governance and corporate
social responsibility disclosure: Evidence from the US banking sector. Journal of Business
Ethics, 125(4), pp.601-615.
Paulet, E., Parnaudeau, M. and Relano, F., 2015. Banking with ethics: Strategic moves and
structural changes of the banking industry in the aftermath of the subprime mortgage crisis.
Journal of Business Ethics, 131(1), pp.199-207.
Reuters 2018. UPDATE 2-Goldman banker had raised ethics concerns - NYT. [online]
CNBC. Available at: https://www.cnbc.com/2018/09/11/reuters-america-update-2-goldman-
banker-had-raised-ethics-concerns--nyt.html [Accessed 7 Oct. 2018].

6ESSAY
Appendix: